Trade Whisperer
Memory Engineer & Data Scientist, Founder of Blue Pink Candles
Cloudflare is an agentic AI and cybersecurity name whose weekly blue-candle signals have paid well for 24 months, and it is hugging its upper Bollinger Band again. Dario Amodei's letter may give it another boost. The key for cybersecurity companies is integrating LLMs well into their ecosystems. x.com x.comÂ
Cloudflare has three AI-driven trends working in its favor. AI will uncover more vulnerabilities; protection against more AI bots, agents and crawlers is needed; and its developer platform, including Workers, is becoming the default for agent-related development. CrowdStrike is not a favorite. x.comÂ
Cloudflare may be the strongest software play on agentic AI in the public markets. x.comÂ
Cloudflare's valuation, about 28.5x EV/ARR and 453x run-rate GAAP EBIT, leaves little room for its competitive risks. Its SASE and developer-platform businesses face Zscaler, Palo Alto and hyperscalers with far bigger budgets, and OpenAI and Anthropic may keep inference on their own backends. The bull case is crisp and arguably priced in: bot security and edge workloads matter more as agents spread, growth sped up from 27% to 34%, and weekly agent requests doubled in January. x.comÂ
Cloudflare is positioned to own the network layer AI agents route through if agents become their own class of traffic. It is building infrastructure specifically for agents: edge inference, tools to authenticate and control agent traffic, and access and payment layers for agent activity. x.comÂ
Akamai has a good catalyst in its expanded partnership with Anthropic. Cloudflare is leading this group and Fastly is also setting up, giving good confluence across stocks that do broadly similar things. x.comÂ
Cloudflare's business outlook looks very bullish, but the stock needs to fall back below $200 before even a small position makes sense. Cloudflare sees a need for a payment processor that can handle millions or tens of millions of transactions per second to support microtransactions on the agentic web, and its recent fireside chat was very bullish. x.com x.comÂ
Cloudflare shares should keep rising as AI-agent traffic lifts demand for edge compute: Oppenheimer reports rising contract values and Workers adoption, with stronger Bot Management and API Shield attachment, and expects Q3 to beat guidance. x.comÂ
Cloudflare's 20% workforce cut reflects AI doing the work of 1,100 employees, not a failing business, so margins are about to explode. It beat on EPS and revenue and raised full-year guidance, with revenue up 34% and billings up 37.8%, and holds $4.16 billion of cash. The 18% post-earnings drop misses that it is building the infrastructure every AI agent on the planet will run through. x.comÂ
Cybersecurity is the real bubble right now, because greater importance in the age of AI does not justify paying valuations like 40x sales for names such as Cloudflare, CrowdStrike and Palo Alto Networks. x.comÂ
AI-powered attacks are spreading so fast that companies are unlikely to cut security budgets, even if they slow broader AI spending. The latest wave hit governments, banks, hospitals, grocery chains and businesses, while AI finds vulnerabilities and breaks in around the clock. That is why Cloudflare, Zscaler, CrowdStrike and Palo Alto Networks rose as broader AI concerns hit tech shares. x.com x.comÂ
